The Politics of Parking and Pensions

I think almost everyone has probably grown tired of the parking and pension issue. But I promised to cover the politics of the solution and so cover it I will.

I don’t take the various proposed solutions to the pension crisis to have been undertaken in bad faith by either Ravenstahl’s office or the council. However, I do think that it was, at bottom, a political solution. That is, a solution that had as much to do with keeping a scorecard of winners and losers as it had to do with bailing out the pension.

Let us start with the mayor’s proposed solution. Lease the parking assets for 50 years to LAZ. This would have generated an immediate 452 Million, of which 230 Million was to go to the pension fund. The rest was discretionary, though it was suggested that some of the remainder would also find its way into the pension fund. 

Now on the face of it this doesn’t seem like such a terrible plan. 452 Million, if invested at 6% a year, will compound to almost 8.5 Billion over 50 years. Further the provisions of Act 44 still allow for the city to impose a parking tax. Finally, a great deal of repair, maintenance and employee costs would be reduced under this lease plan. 

But the plan was rejected. Informing this rejection was the idea that a long term of lease of assets should be a last resort for any city. Something that should only be done when there is no other way to make budget. In fact, Chicago’s 75 year lease of parking assets and the steep increases in parking rates was also on everyone’s mind during that time. It was widely reported that LAZ was  aggressively enforcing meter times and paid that city about a quarter of what its parking assets were worth.

Now, fair enough, LAZ may be a company with more to gain from this deal than the city. It certainly would have imposed a more aggressively enforced and expensive parking deal and they would have been largely outside of public control.

So what did we get instead? 

More aggressive enforcement, more expensive parking and a parking authority that is largely outside public control!

However, in order to get that we had to go through a few different plans. Each was rejected in some form or other by the mayor’s office. 

Throughout the argument between city council and the mayor a fairly constant refrain could be heard – “keep public assets public”. Indeed, Dowd did a great deal to forcefully articulate this position at every opportunity, though I often took him to speaking for most everyone else when he did.

"I want to keep public assets public. I want to savethe pension fund" from state takeover, he said. "Improving theservice of the parking authority is the third goal."

The problem is that many of the proposals offered by council didn’t really do that. 

It might help to recall the various alternatives that were being floated at this point in the debate.

 One scheme would have given the parking infrastructure directly to the pension fund.

-This would have, perhaps, saved the pension but it would have then been outside the public control and little would have improved in the parking authority.

 Another was to sell the parking infrastructure the city owned to the parking authority and use the proceeds to fund the pension.

-Given that the mayor controls the authority this also would have reduced the public nature of these assets. The money would have flowed into the parking authority not the city.  Again, nothing in this plan improves the service of the parking authority. 

Still another was to lease certain lots and meters to a private contractor for 40 years but with a revenue sharing agreement.

- Again maybe this prevents the takeover, but the other issues are untouched or made worse.

Each of these was rejected by the mayor’s office at various times.In response, Dowd said the mayor’s exhibited a “failure of leadership”. And Peduto accused the mayor of bullying tactics and threats. The perception wasthat this was a game of brinkmanship. By declining to offer alternatives the Mayor was dooming the pension fund to takeover by the State.

Which brings us to the proposal that won out. Transfer the parking tax revenue stream to the pension fund for the next 40years, and deal with the hole created in the budget by demanding a greater cut of the increased revenue brought on by rate increases and aggressive enforcement from the parking authority.

 I suppose this keeps public assets public but only nominally so. The problem is that the lion’s share of the parking infrastructure is still controlled by the parking authority and they have been particularly recalcitrant in coming to a new deal on sharing that revenue stream. While the authority is controlled by the mayor’s office, and so is in some sense under public control, in reality this extra layer of bureaucracy insulates the parking authority from real oversight and scrutiny.

Now city council was facing a deadline here and had little support form the mayor’s office, but it should still be pointed out that while they had criticized the mayor for playing a game of brinkmanship, they did something similar. They essentially put themselves in a position to go broke if the parking authority didn’t renegotiate its revenue sharing agreement with the city. 

In this interplay between council and the mayor, the urge to position oneself to declare victory over the other is particularly palpable. The mayor wants to see his plan succeed and so he ignores alternatives and refuses to allow his parking authority to cooperate with council’s plans. In response the need to show up the mayor as uncooperative leads council to stretch their authority to the absolute limit and essentially make the city’s budget contingent on that cooperation. 

As far as the second desire of Dowd’s goes, this was obviously accomplished. The pension fund was saved. Still, that outcome looked far from certain for a long time and I have heard privately from many who were surprised by that outcome.

Was the parking authority’s service improved? No. But then, I wonder if that was really a realistic goal anyway. If Dowd believed he could pull this off, he is to be admired for his ambition, but I suspect that this functioned as another talking point: another way to needle Ravenstahl.

So here we sit with some tough decisions to make about parking revenue, some tough politicking to get the parking authority to accept a new revenue sharing agreement, and the silver lining – a plan that actually rescued the pension fund. 

But I don’t think we are in any position to say, from this position, whether that solution was the best one. We still have one of the problems that come with the lease plan – more expensive parking and aggressive enforcement. And we don’t enjoy the benefits of outsourcing maintenance, employee costs and repairs. These are largely benefits the parking authority would enjoy, but if we consider that a ‘public entity’ then I guess we can claim those costs and benefits as our own.

We also have the pension fund under our control, in some sense. We can’t really tamper with the revenue stream, though at least we made the decision to use that revenue. And while keeping it seems like a victory, in reality it is a mixed bag. 

The state’s pension fund would have given us lower administration costs, more realistic projections of growth and would have been subject to more professional management. (Our pension fund, in contrast, has made risky investment decisions and recently pulled assets completely out of the stock market – losing millions) But turning the fund over to the state would have come with new taxes. At least by gaining revenue from parking we take some share of the money from the pockets of our suburban neighbors. 

Finally, have we kept public assets public? We haven’t privatized them, certainly, but we don’t have ready access to the revenue generated by them either. If they were public assets in the first place, I guess we have kept them as such. But there are real obstacles to seeing them as ever truly public.